# Flexible budget working backward the alpha company

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7-24 Flexible budget, working backward. The Alpha Company manufactures designer jewelry for jewelry stores. A new accountant intern at Alpha Company has accidentally deleted the calculations on the company’s variance analysis calculations for the year ended December 31, 2017. The following table is what remains of the data. Performance Report, Year Ended December 31, 2017 Actual Results Flexible-Budget Variances Flexible Budget Sales-Volume Variances Static Budget Units sold 150,000 140,000 Revenues (sales) \$975,000 \$630,000 Variable costs 675,000 350,000 Contribution margin 300,000 280,000 Fixed cost 150,000 130,000 Operating income \$150,000 \$150,000 Required: 1. 1. Calculate all the required variances. (If your work is accurate, you will find that the total static-budget variance is \$0.) 2. What are the actual and budgeted selling prices? What are the actual and budgeted variable costs per unit? 3. Review the variances you have calculated, and discuss possible causes and potential problems. What is the important lesson learned here? 7-26 Price and efficiency variances. Modern Tiles Ltd. manufactures ceramic tiles. For January 2017, it budgeted to purchase and use 10,000 pounds of clay at \$0.70 a pound. Actual purchases and usage for January 2017 were 11,000 pounds at \$0.65 a pound. Modern Tiles Ltd. budgeted for 40,000 ceramic tiles. Actual output was 43,000 ceramic tiles. Required: 1. Compute the flexible-budget variance. 2. Compute the price and efficiency variances. 3. Comment on the results for requirements 1 and 2 and provide a possible explanation for them. 7-29 Price and efficiency variances, journal entries. The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: Direct materials: 10 lb. at \$4.50 per lb. \$45.00 Direct manufacturing labor: 0.5 hour at \$30 per hour 15.00 The number of finished units budgeted for January 2017 was 10,000; 9,850 units were actually produced.